The Securities and Exchange Commission of Pakistan will not approve any person, who has entered into a plea bargain arrangement with the National Accountability Bureau (NAB) or any other regulatory body, for appointment as Chief Executive Officers/Principal Officers, Directors and key officers of the public and private sector insurance companies.
According to the Insurance Companies (Sound and Prudent Management) Regulations, 2011 shared by the SECP with media here on Thursday, the SECP shall not consider following categories of persons as 'Fit and Proper persons' for appointment as Chief Executive Officers/Principal Officers and Directors of the public and private sector insurance companies:
Firstly, if he has been convicted of criminal breach of trust, fraud and etcetera. Secondly, if he has been convicted of an offence involving moral turpitude. Third if he has been subject to adverse findings, after conducting an inquiry, by the Commission or any other regulatory or professional body or government agency. Fourthly, if he has been involved in the financial irregularities or malpractices in a company due to which the registration or license of the company has been revoked or cancelled or which has gone into liquidation or other similar proceedings. Sixthly, if he is ineligible, under the Companies Ordinance, 1984 or any other legislation from acting as a director or has entered into a plea bargain arrangement with the National Accountability Bureau or any other regulatory body.
The Insurance Companies (Sound and Prudent Management) Regulations, 2011 further stated that a proposed director or chief executive or principal officer of the insurer shall not assume the charge of office until their appointment has been approved by the Commission. The application for seeking approval of the Commission under Sub- Regulation (2) shall be submitted by the insurer along with the requisite information required under Annexure "A" and an Affidavit as specified in Annexure "B" of the regulations.
The appointment of Key Officers of an insurer does not require the approval of the Commission, however an insurer shall ensure at the time of appointing a Key Officer that such person qualifies the requirements of these Regulations. The key officers included chief operating officer, head of operation; chief financial officer, head of accounts; head of actuarial department; head of law, company secretary or compliance officer; chief investment officer, head of investments; head of internal audit and heads of departments.
The fitness and propriety of a person shall be assessed by taking into account all the relevant factors including but not limited to the following: integrity and track record of such person; financial soundness of such a person; competence and capability of the person and conflict of interest of such person with the business of the insurer.
All persons subject to these Regulations shall submit any change in the submitted information through the authorised person of the insurer to the Commission, SECP regulations said.
In determining a person's financial soundness, the following shall be considered: Whether the person has been defaulter in repayment of loan to a financial institution, exceeding Rupees one million or defaulter of a stock exchange; whether the person has applied to be adjudicated as an insolvent and his application is pending or whether the person is an un-discharged insolvent, SECP regulations said.
In determining a person's competence and capability the following shall be considered: The chief executive or principal officer must fulfill the laid down requirements. Such person must have a minimum educational qualification of a bachelor's degree or equivalent from an institution recognised by the Higher Education Commission of Pakistan or foreign qualification of equivalent level recognized by the Higher Education Commission of Pakistan, with at least 10 years experience out of which 5 years as Key Officer in the insurance industry. Such person must (a) be an ACII or FCII, (b) be a Fellow of the Institute or Society of Actuaries or equivalent qualification as recognized by the Pakistan Society of Actuaries, (c) hold a masters degree in Insurance, Risk Management or Actuarial Science from a university recognized by the Higher Education Commission with at least 5 years experience as Key Officer in the insurance industry.
The directors should be individuals having management or business experience of at least five years at senior level. The key officers must be qualified professionals possessing relevant experience and duly recognized qualification/ certification relating to the job or assignment.
The chief executive, principal officer or director or key officers of an insurer shall not be a director in any other insurer engaged in a similar line of insurance business in Pakistan such as life or non-life insurance business. They shall not have any direct or indirect ownership or management interest in any insurance surveyor or insurance broker. They shall not be a member of stock exchange or director or employee of a brokerage house registered at any stock exchange or a spouse of such persons, Insurance Companies (Sound and Prudent Management) Regulations, 2011 stated.
Under the regulations, the insurers shall ensure that their existing Key Officers comply with the provisions of this notification within one year from the date of publication of this notification;
A person appointed as chief executive or principal officer after the issuance of these regulations is in compliance with provisions of these Regulations, however the existing chief executive officer or the principal officer shall be required to comply with the provisions of these Regulations within five years from the date of notification of these regulations and the existing directors comply with provisions of these Regulations before the commencement of their new term in office, if any, as directors.